Officials Wary of Chevron’s Plan to Pump at Arguello

Chevron Corp.’s announcement last month that it would start up oil production at its long-idle Point Arguello offshore project has raised questions among wary local officials who wonder if the oil company plans to try to circumvent local opposition to tanker shipments.

Chevron, which leads a consortium of 18 oil companies, decided to fire up the $2.5-billion project in part to break an impasse with Santa Barbara County, which has so far turned down applications to ship the project’s oil by tanker.

Last month, Chevron said it would move 20,000 barrels of oil a day by pipeline from the project to refineries in San Luis Obispo and Kern counties or farther north.

But some officials in Santa Barbara and San Luis Obispo counties are asking whether the project’s sponsors really intend to ship the oil to ports in San Luis Obispo County, where it would be loaded onto tankers and shipped out. That would effectively circumvent Santa Barbara County and its objections altogether.

Unocal Corp., which operates the Avila Beach marine terminal near San Luis Obispo, was concerned enough about local reports intimating such a move that it issued a statement this week denying it.

Chevron spokesmen also flatly denied any intention to get around the Santa Barbara County ban or to ship oil by tanker.

Separately, a prominent Santa Barbara County official has publicly questioned whether Chevron genuinely plans to pursue construction of a pipeline that would follow the old Southern Pacific Railroad right of way to bring Point Arguello oil to Los Angeles-area refineries.

In its application to Santa Barbara County, Chevron had promised to ship oil by tanker only temporarily, saying it was aggressively pursuing the pipeline option.

However, Tom Rogers, chairman of the Santa Barbara County Board of Supervisors, said he was told in a meeting with Assistant Secretary of the Interior David O’Neal “that Chevron’s plans for a pipeline along the Southern Pacific route were dead, and since we had been leaning on that issue, we were shocked.”

A consultant to O’Neal who attended the meeting, former Santa Barbara County Supervisor Robert Kallman, confirmed Rogers’ account. But Kallman said he and O’Neal were merely passing on rumors about the pipeline project. O’Neal could not be reached for comment.

Chevron insists that it remains committed to such a pipeline, which it considers the likeliest prospect among a number of pipeline options for moving the offshore oil to refineries.

But, added Larry Perkins, a project coordinator for Chevron in Walnut Creek: “The pipeline is not developed enough to the point where we could say it’s a go project.”

Most frustrating to officials is the lack of hard information coming from Chevron about its precise plans for the new oil production out of Point Arguello.

Specifically, Chevron has said it plans to pump oil through the All American Pipeline from the project’s processing plant at Gaviota. Under one plan, oil would be transferred at a pumping station at Sisquoc to a Unocal pipeline that would carry about 10,000 to 15,000 barrels north each day to a Unocal refinery near Santa Maria.

The other plan would pump the oil along the All American Pipeline to a pumping station at Emidio, where it would be transferred to Texaco Inc. pipelines. They would move it north to refineries in Kern County or the Bay Area.

The first plan is the one that has raised questions for officials of Santa Barbara and San Luis Obispo counties.

Oil pumped into the Unocal refinery is turned into semi-refined products, such as gas oil and naphtha, that are then moved to other refineries for further processing into finished products, such as gasoline.

Most of the Unocal refinery’s production is moved by pipeline north to the Bay Area; some of it is piped to Unocal’s Avila Beach terminal and shipped out by tanker.

John von Reis, energy projects manager for San Luis Obispo County, wonders if the increased production from Point Arguello would leave Unocal with no choice but to increase tanker traffic. “We don’t know what will happen, and we would be very interested in the details of that,” he said.

In any event, he acknowledged, San Luis Obispo County has little authority to restrict tanker traffic moving in and out of Avila Beach, one of two county oil ports that see about 180 tanker trips a year.

Officials of the California Coastal Commission, which is considering Chevron’s appeal of Santa Barbara County’s denial of a tanker permit, also want more information about the oil firms’ plans.

“We want to know exactly what’s happening with (the oil), because they haven’t said specifically where the oil’s going to go or where it’s being transported,” said Susan Hansch, manager of the commission’s energy and ocean resources unit.

In its statement this week, Unocal said the Point Arguello crude oil would be used solely as feedstock for its Santa Maria refinery and would not be shipped out of Avila Beach. Unocal spokesman Jeff Callender also said the Point Arguello crude would not mean increased tanker shipments of semi-refined products out of Avila Beach.

Ironically, Santa Barbara County may have the last say on whether Point Arguello crude ever gets into Unocal’s system:

A 6.5-mile pipe link must still be built between the All American Pipeline and Unocal’s pipelines--subject to review and approval by the county.